Labour Statistics: Issues In Integrating Labour's Dual Roles of Input to Production and Social Resource

1. Labour Statistics: Issues In Integrating Labour's Dual Roles of Input to Production and Social Resource Berkeley Hill, Federico Perali, Cristina Salvioni

2. Structure of paper • Introduction • Peculiarities of farm households’ labour supply • Internal equilibrium of the household • Time use and valuation of “unpaid” domestic labour • Lessons from Italy and Wales • Conclusions

3. Introduction • Labour statistics have roles in • Describing the changing size and demographics of this industry – cross sections and exit and entry • Calculation of income indicators derived from economic accounts for agriculture • Productivity measurement • Decisions relating to the household and to input to agriculture are inseparable • Great diversity in types of household

4. Peculiarities of farm households’ labour supply - 1 • Domination by self-employed labour • Difficulty of measuring labour time as an input • Uncertain number of hours, especially with managerial input • Simultaneous multiple tasking • Leisure and work often non-separable • Differing quality of individuals (age, education etc.)

5. Peculiarities of farm households’ labour supply - 2 Problems in statistics • Often assume only one farmer per farm • Some family workers are hired/waged • Casual labour difficult to measure • Business structure often hide nature of labour • Workers on large institutional units in EU10 – how are they to be treated?

6. Peculiarities of farm households’ labour supply - 3 • Importance of recognising that households supply labour (not a disembodied input) • Decisions on using labour for agriculture only part of the household’s allocative decisions • Uses for other economic activities need to be taken into account • Other self-employment and employment • Domestic activities (food production for own consumption, household reproduction etc.)

7. Internal equilibrium of the household -1 • When production and consumption decision variables are non-separable, then market goods and leisure are not priced at the market value. • Recent empirical work show that production decisions do depend on farmers’ preferences and endowments. • Hence, shadow wages, rather than market wages, determine labor/leisure choices.

8. Internal equilibrium of the household - 2 • In the calculation of farm income, the estimation of the implicit wage for household labor is a fundamental issue. • Traditionally, “unpaid” family labor does not appear as an explicit cost of production. • The shadow evaluation of family labor can be estimated using three different approaches: • Accounting • Objective market wage under competitive conditions • Shadow wage

9. Internal equilibrium of the household - 3 • Domestic work (hi) is also defined as unpaid work. • The availability of individual time-use data permits separating the time devoted to domestic work from the time allocated to pure leisure.

10. Internal equilibrium of the household - 4 • Each member (i) of a farm household of size N can allocate its time endowment among the following activities , fi time devoted to farm labour activities; oi time devoted to off-farm labour (either in agriculture or in other sectors) and commuting time; hi time devoted to unpaid home production activities; li time devoted to pure leisure (e.g. recreational activities); Ii time devoted to rest and personal care.

11. Global, extended and full income • Information about off-farm paid employment permits the derivation of global farm household income(Hill; Eurostat; OECD; Smeeding; Smeeding and Weinberg). • The estimation of shadow wages for domestic activities permits the derivation extendedhousehold income (Lazear and Michael; Jenkins and O’Leary;INSTRAW). • The sum of extended income and the value of leisure time forms the Beckerian notion of fullincome (Becker).

12. Italy - Composition of Full Income by Farm Household Typology—Euros

13. Italy - Inequality of Farm Incomes by Household Types and Gender—Gini Coefficients

14. Wales • Existing data do not allow the broader allocation decisions to be monitored adequately (e.g. labour used for non-farm activities) • Panel approach would be helpful • People who leave farming are lost from the statistics • Labour statistics on other activities in the countryside are particularly weak

15. Conclusions • Labour statistics should recognise the household origins of this resource • Surveys should be designed with this in mind • Quantification of self-employed labour is difficult and statistics should not make simplistic assumptions • Sufficient information should be provided to economists/analysts to allow shadow earnings to be considered